Guillermo has built a successful empire in the furniture business in the beautiful city of Sonora, Mexico. The reason behind his success is due to a large supply of timber that is available to him for producing a variety of tables and chairs. Furthermore, the labor costs for producing his furniture is relatively inexpensive, therefore, he is able to offer high quality furniture. It was smooth sailing for Guillermo’s business until the occurrence of two major events that changed everything. First, a competitor from overseas entered the furniture market offering rock bottom prices for furniture that is produced by a computer-controlled laser lathe to produce exact cuts in the wood. Second, the city of Sonora is suddenly experiencing a high influx of people due to what the city has to offer – beautiful scenery, no traffic, a new international airport, affordable housing, favorable weather, and lots of development. Competition and an increase in people and jobs resulted in a substantial increase in labor costs. Because of these unforeseen circumstances, Guillermo’s business suffers a lost in profit margins. With the occurrence of these sudden challenges, Guillermo must evaluate the situation and come up with the best possible solution so that his business will not only survive, but continue to flourish as it once did. He has a couple of options to consider, a) Whether he should invest money to purchase computer-controlled laser lathe b) Become a representative for the second rival company in Norway and become a distributor instead of a manufacturer c) Utilize the patented process he has for creating coating finishes for furniture
This paper will investigate three things: Guillermo’s decision-making based on
